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The Ticketor
30-11-2004, 10:02
Media Release


29 Nov, 2004
MALAYSIA AIRLINES CONTINUES TO RECORD HIGHER PROFITS

Malaysia Airlines (MAS) is pleased to announce a profit after tax of RM132.7 million and RM159.3 million for the second quarter and half year respectively, which was an increase of 31% and 351% from same period last year.

Highlights

The performance for the half year ending 30 September 2004 was on the back of revenues of RM5.2 billion, which was driven by increase of passenger uplift of 31% and the continued growth of the Maskargo operations. In the quarter, total revenue rose by 28% to RM2.77 billion from the same period last year.

“The results continue to highlight the successful execution of the business plan and ability of MAS to grow and improve yields while managing our operating cost,” said Dato’ Ahmad Fuaad Dahlan, Malaysia Airlines Managing Director.

He added, "The results would have been stronger if not for the rising fuel cost.” The Group’s operating expenditure increased by 29%, mainly due to higher fuel cost.

Passenger

Most of the key operating statistics for the half-year and quarter improved significantly over the same period last year, which bore the full brunt of SARS and the Iraq war. In addition to restoring ASK (available seat km) to pre-SARS level, the network was expanded with additional capacity injected into certain sectors. Seat factor also increased in the half year, driven by growth within the industry as a whole and through various marketing initiatives, both within and outside Malaysia.

MASkargo continues to play an increasingly important role and contributes more than 20% of total revenue. Due to the high growth of the Asia Pacific market, cargo movement has become a significant business opportunity. MAS is well positioned to capitalise on this growth opportunity with its freighter fleet and belly cargo. The major contributor to growth has been from within the China market. MASkargo is now the biggest freight operator in Pudong. Cargo throughput is expected to rise by 15% this financial year. MAS will spend RM60 million to increase warehouse capacity to 100,000 sq ft to handle 1.5 million kg per annum. This is in line with the national aspiration to make KLIA a prominent hub for cargo. Work on the expansion project will be completed in 2007. The present warehouse can handle 650,000 kg a year with a current utilisation rate of more than 90%.


Prospects

The network strategy remains focused on developing regional dominance and growing the China and India markets. Frequencies into existing destinations such as Mumbai (4x to 7x), Bangalore (2x to 3x) and Hyderabad (1x to 2x) will be increased in December 2004, and the daily Chennai flights will be upgraded to a B744 from an A330 effective 1 December 2004. The total systemwide ASK increase for the Northern Winter FY04/05 over the same period last year is 11.2%. For China and India, the increase is 26% and 42% respectively for the same period. More destinations will be launched soon. They are Ahmedabad in December 2004, Kunming and Kolkata in January 2005 and Xian in March 2005. “Our fleet planning takes into consideration the need to deploy the appropriate aircraft type into these markets while improving passenger comfort and operational efficiencies,” said Dato’ Ahmad Fuaad.

He added: “Our long-haul markets also remain important and we will continue to fortify and strengthen our current positions. The upgrading of our cabin and the improvement of our in-flight service offerings will further strengthen our competitive position within these markets.”

MAS is investing RM700 million to upgrade seventeen B777’s and fifteen B747’s aircrafts over 18 months to enhance its appeal to the business travelling market and consequently improve premium seat factors. The first of the upgraded B777 and B747 will be deployed in December 2004 and February 2005 respectively. The upgrading in First/Business class includes new flat bed seats while all classes will enjoy movies, music and interactive games on demand (i.e. AVOD) and SMS services. Project Relish is underway to enhance meal quality and presentation. MAS is optimistic that these initiatives will result in improvements in overall yield, particularly the contribution from the premium (first/business class) component. The preparations, including equipment, hangar and simulator, for the delivery of the first of 6 A380’s in January 2007 are on track.

In addition, the two new B777-200’s will be the first in Asia-Pacific to be equipped with a software developed by Boeing called the electronic flight bag (EFB), which will further enhance flight safety. The EFB is a software system located in the cockpit to allow pilots to manage routine flight operations via electronic displays and information without the hassle of tedious paperwork.

Two additional Boeing 747-400 freighters will be added in 2006. These were originally passenger aircraft orders, and its conversion further highlights the increasingly important role of cargo.

The internet booking facility will allow MAS to deliver its service through a new and efficient distribution channel and capitalise on the new flexible pricing regime. MAS will continue to develop its internet booking facility as it allows for tremendous cost efficiencies.

Dato’ Ahmad Fuaad concluded: “We are pleased with our second quarter results and with the growth of our business. We believe we are well positioned to capitalise on growth opportunities and hope to further improve financial position and performance.”




Issued by:
Media Relations/Corporate Communications Department and Investor Relations Department
Malaysia Airlines, Kuala Lumpur


For further enquiries on this release:

1) Media: Jacqui Christi
Tel: (603) 2165 5390 HP: (6019) 231 0028

2) Investor/Analyst: Senthil Balan Danapalan
Tel: (603) 2165 5364 HP: (6012) 202 4424


More information can be found within the “Investor Relations” section at www.malaysiaairlines.com.my